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Bar Journal - Spring 2006

Electronic Discovery: Litigation Crashes into the Digital Age

By:


Computers are present in every aspect of our lives. Electronic data and digital storage devices are replacing paper and filing cabinets. Email is far more prevalent and often preferred to face-to-face meetings and telephone calls, and the Internet has reinvented the way we communicate, transact business and obtain information.

 

Society’s addiction to continuous technological innovation has caused an explosion in the amount of electronic data created and a proliferation of electronic devices upon which data is stored.2  In the words of U.S. District Court Judge Shira Scheindlin, who authored a series of seminal decisions in this area, as “individuals and corporations increasingly do business electronically—using computers to create and store documents, make deals, and exchange e-mails—the universe of discoverable materials has expanded exponentially.”3

 

While lawyers as a group have been slow to adopt technology for ourselves, we are not ignorant about the value of it in lawsuits. Now, the smoking gun is much more likely to be found in electronic data than on a piece of paper.4  It is not surprising, therefore, that litigation is crashing into the digital age in the form of “e-discovery.”

 

Electronic data is fair game for discovery. Over three decades ago, the Federal Rules of Civil Procedure were amended to clarify that “documents” discoverable under Rule 34 include electronic data.5  However, that change did not suffice to keep the law abreast of the profound changes in information technology that have occurred since then.

 

Discovery of electronic data raises markedly different issues from the discovery of documents, because there are fundamental differences between data and paper. For example, while it may be black letter law that data is discoverable, it is not at all clear how much discovery a litigant can obtain when the amount of potentially discoverable data is enormous, particularly data that is time consuming and costly to restore. As Judge Scheindlin aptly observed, the “more information there is to discover, the more expensive it is to discover all the relevant information until, in the end, discovery is not just about uncovering the truth, but also about how much of the truth the parties can afford to disinter.”6

 

E-discovery also raises major issues involving the duty to preserve evidence for litigation and the sanctions imposed for spoliation of it. Because the amount of potentially discoverable data is often overwhelming and data is susceptible to unintentional and automatic destruction, spoliation is a frequent e-discovery problem, which can result in monetary sanctions commonly in the tens of thousands of dollars and case crippling negative evidentiary inferences.

 

E-discovery law has had to evolve rapidly just to catch up to and keep pace with the ever increasing speed of technological innovation. Pioneers in this area initially devised principles to guide the growth of the law, called The Sedona Principles: Best Practices Recommendations & Principles for Addressing Electronic Document Production (“Sedona”).7  A few decisions from wise federal court judges also have been very influential.8  Most importantly, the U.S. Supreme Court recently approved significant amendments to the Federal Rules of Civil Procedure to address e-discovery, which take effect December 1, 2006. E-discovery also is a topic of some state court rule amendments, including New Hampshire.

 

Coming up to speed on e-discovery is a daunting task for many lawyers. Those who succeed in doing so will realize that the framework for e-discovery makes sense, and they will have the ability to effectively litigate in the digital age. Those who do not will find themselves at significant disadvantages. This will happen because, while e-discovery not only has a “potential to increase discovery costs and delays, further burdening the litigation process,” it has an equal “potential to make discovery more efficient, less time-consuming, and less costly, if it is properly managed and effectively supervised.”9

 

A.   There Are Fundamental Differences Between Documents and Electronic Data

To comprehend e-discovery rules and be an effective digital age litigator, it is critical to understand the fundamental differences between electronic data and paper. Old assumptions about paper do not translate well into the realm of electronic data. For example, an old assumption is that a party retaining electronic data “does so because the information is useful to it,” and therefore it should bear the burden of retrieving discoverable materials from the data.10  That assumption is invalid for e-discovery because the costs of storing electronic data are in substantial and many types of storage devices are not amenable to litigation discovery.

 

There are five key differences between electronic data and documents: (1) volume; (2) persistence; (3) dynamics; (4) environment-dependence; and (5) dispersion.

 

The first and most significant difference is that the amount of information available for discovery has exponentially increased. Through the continuous use of an expanding variety of computer technologies, we constantly create electronic data (particularly email) that accumulates at an accelerating pace. To keep up, we invent devices that store ever larger volumes of data in ever smaller packages. For example, millions of printed pages are now easily carried on a “zip drive” smaller than your thumb.11

 

There are also entire categories of data that have no paper analog and are created in vast quantities, such as “metadata.”  Metadata is information about other data, like when and who generated the data, whether and how the data was copied or transmitted, and when and what was changed. Metadata exists at various levels, often being invisible or inaccessible to most users, and there may be many hundreds of pieces of metadata associated with one electronic document. Knowing if metadata needs to be preserved and produced can be one of the biggest challenges in electronic document production.12

 

The volume of potentially discoverable data is not just a knotty logistical issue. Moreover, large corporations are not the only litigants that generate huge volumes of data. The costs and burdens associated with e-discovery are so significant to most litigants that, if unregulated, e-discovery will become the decisive factor when developing a litigation strategy in many cases, and will preclude litigants from pursuing meritorious claims.13

 

Another major difference between electronic data and paper is that data is persistent. It is not erased when it is deleted, and it is rarely destroyed unintentionally or without significant effort. Judge Scheindlin described this phenomenon as follows:

The term ‘deleted’ is sticky in the context of electronic data. ‘Deleting’ a file does not actually erase that data from the computer’s storage devices. Rather, it simply finds the data’s entry in the disk directory and changes it to a ‘not used’ status—thus permitting the computer to write over the ‘deleted’ data. Until the computer writes over the ‘deleted’ data, however, it may be recovered by searching the disk itself rather than the disk’s directory. Accordingly, many files are recoverable long after they have been deleted—even if neither the computer user nor the computer itself is aware of their existence. Such data is referred to as ‘residual data.’  * * *  Deleted data may also exist because it was backed up before it was deleted. Thus, it may reside on backup tapes or similar media.14

 

Persistence compounds the rate at which data accumulates, and creates another category of discoverable data existing unknown to the individuals with custody over it. This issue has even led to a proliferation of software that purports to electronically shred or erase deleted data, such as one called “Evidence Eliminator”; although some such programs are ineffective, and the use of them is detectible and raises obvious spoliation and sanctions issues.

 

The third significant difference between documents and electronic data is that data is dynamic. It is “designed to change over time without human intervention” and is “never fixed in a final form” by its very nature.15  Data can be modified in innumerable ways, both intentionally and inadvertently, and such modification can be difficult to detect without computer forensics or impossible to detect at all. Indeed, merely accessing or moving electronic data or turning a computer on or off will modify data on it.

 

Another dynamic feature of electronic data is that it is easily, rapidly and perfectly reproducible. As a result, computers create and store copies of electronic data, typically without the awareness of the user, and the copies can be identical, differ only in minor or unimportant ways, or be greatly or meaningfully different.16

 

The dynamic nature of electronic data has significant ramifications upon a person’s duty to preserve evidence in anticipation of potential litigation. Unlike paper, any delay in locating and securing discoverable data could result in critical evidence becoming irretrievably lost. This danger is so significant that the new Federal Rules of Civil Procedure have a “safe harbor” from sanctions for spoliation due to the good faith loss of data during routine operations of a system.

 

The fourth distinguishing feature of electronic data is that it is environment-dependent. Data is incomprehensible without a computer to decipher it, and often cannot be easily accessed outside the operating system that created it.17  As a result, the use of proprietary technology and software is necessary to access certain electronic data, and a litigant would be obliged to make its computer systems and personnel available to afford meaningful discovery to its opponent. The rapid pace of computer innovations exacerbates this problem by frequently rendering hardware and software obsolete. Because of the “turnover in computer systems, neither the personnel familiar with the obsolete systems nor the technological infrastructure necessary to restore the out-of-date systems may be available when this ‘legacy’ data needs to be accessed.18

 

The last major difference between electronic data and documents is that data tends to be highly dispersed. It frequently is stored on numerous different media, such as hard drives, servers, cell phones, and magnetic tapes. Data is also dispersed because of the manner in which it is electronically stored. While humans create systems to categorize paper in files, data repositories typically lack a similarly coherent structure.19

 

For example, magnetic tapes are commonly used to backup entire systems. While these tapes have a high storage capacity, data is retained on them in an undifferentiated mass. These tapes are intended for disaster recovery of an entire system, not targeted recovery of particular data. It is consequently impossible to determine if particular data exists on a tape or to retrieve it without restoring the entire system on the tape. The challenges presented by backup tapes cannot be understated, and have driven much development of e-discovery law. “It is impossible to walk ten feet into the office of a private business or government agency without seeing a network computer, which is on a server, which, in turn, is being backed up on tape (or some other media) on a daily, weekly or monthly basis. What alternative is there?  Quill pens?”20

 

The dispersion of electronic data (particularly on backup tapes), in conjunction with the ever increasing volume of data stored on such media, culminate to create a significant danger of skyrocketing litigation costs. The recovery of data for litigation could become “an awfully expensive needle to justify searching a haystack”; and, if left unchecked, e-discovery would become “a gigantic club with which to beat [an] opponent into settlement.”21

 

B.   Be Prepared for the Issues that Arise in E-Discovery Production

While electronic data is fundamentally different from paper, e-discovery should not require a fundamental change in the policies underlying litigation discovery. Broad discovery is the cornerstone of the litigation process in our judicial system. Electronic data therefore “should be as freely discoverable” as paper documents.22  While the unique features of data “may require a different approach and more sophisticated equipment than a photocopier, there is nothing about the technological aspects involved which renders documents stored in an electronic media” any less discoverable than paper or tangible things.23

 

1.   Electronic Data Is a New Category under Fed. R. Civ. P. 34

The amended Federal Rules of Civil Procedure add “electronically stored information” as a new “category” of discoverable materials.24  E-discovery therefore stands on equal footing with the discovery of paper documents and tangible things in federal courts.

 

Under new Rule 34, a litigant may request production of electronic data stored in any medium, and also may seek to inspect, test or sample that data. “Electronically stored information” is an expansive concept, encompassing “any type of information that is stored electronically”; and it “is intended to be broad enough to cover all current types of computer based information, and flexible enough to encompass future changes and developments.”25

 

A litigant is entitled to receive electronic data in a “reasonably usable form,” and therefore has the option to specify in its requests the form or forms in which it would like the data produced. If the responding party objects, or if no form was specified, the responding party must state in its responses the form or forms that it intends to use to produce data. The purpose for this disclosure requirement is to enable the parties to resolve disputes before they incur production costs and avoid delays due to production of data in an inappropriate form.26

 

The responding party is limited with respect to the forms it may choose to produce data. Unless the parties agree or the court orders otherwise, a litigant must produce data either “in a form or forms in which it is ordinarily maintained or in a form or forms that are reasonably usable” by the opponent.27  Data produced in the form it is ordinarily maintained usually means “native” form, and may require giving the opponent direct access to the responding party’s electronic systems.28  Due to issues inherent in native form production, the responding party may choose to produce data in another form, as long as that alternative is as effective as the original.29  Production either in the original or an alternative form also may require the responding party to “provide some reasonable amount of technical support, information on applicable software, or other reasonable assistance to enable the requesting party to use the information.”30

 

Unlike the Federal Rules of Civil Procedure, most state courts have not yet undertaken a similar modification of their rules to accommodate e-discovery. In those states, electronic data will continue to be discoverable as a subset of “documents,” and courts and litigants can look to federal rules and cases as persuasive authority when addressing e-discovery issues.

 

2.   Counsel Should Discuss E-Discovery Early in the Litigation

Both the new Federal Rules of Civil Procedure and the proposed change to the New Hampshire Superior Court Rules force litigants to confer about e-discovery prior to the initial discovery conference with the court. The purpose for doing so is to facilitate agreements about the scope of e-discovery in order to “identify and attempt to resolve disputes before they create collateral litigation” and “minimize the likelihood of post-discovery spoliation issues.”31

 

Counsel and litigants should consider and discuss the following five e-discovery issues as early in the litigation as possible, and at least before the discovery conference.

 

First, discuss the nature of existing electronic data that is likely to be subject to discovery. This requires counsel to be or become knowledgeable about the client’s technology systems at the outset of litigation.32  In fact, if electronic data is expected to be evidence in a lawsuit, the plaintiff’s counsel should have become familiar with its client’s technology systems and preserved potentially discoverable data even before filing suit, and the defendant’s counsel should have done the same if the suit was anticipated.

 

Second, discuss the likely topics of e-discovery requests and sources from which data may be obtained. Counsel should particularly discuss data that they consider to be inaccessible. If discoverable electronic data exists on inaccessible media, counsel also should confer about the likely costs of recovering such data, the potential for restoring a sample of the data to determine the utility and cost for additional data recovery, and the extent to which such costs may be properly allocated between the parties. These discussions should reveal whether it is necessary to conduct early written discovery about a litigant’s technology systems and early depositions of information technology personnel.

 

Third, discuss the actions taken by the litigants to date and efforts to be made as litigation proceeds to preserve potentially discoverable data. In particular, counsel should address whether and the extent to which inaccessible data will be preserved, such as backup tapes, metadata and deleted data. While the tendency of most litigants is to require the adversary to preserve everything, counsel should strive to balance the “competing needs to preserve relevant evidence and to continue routine operations critical to ongoing activities. Complete or broad cessation of a party’s routine computer operations could paralyze the party’s activities.”33  The failure to address these issues as early as possible in litigation increases uncertainty and raises a risk of disputes about the scope of e-discovery, spoliation and sanctions.

 

Fourth, discuss the forms that electronic data will be produced. Early dialogue on this topic will enable litigants to plan for the production of data in forms acceptable to the requesting party, and will identify potential disputes to be brought to the judge at the discovery conference.

 

Finally, discuss how privilege and work-product will be protected when producing electronic data. Counsel should particularly address whether to enter into an agreement about inadvertent production of such data. These discussions and agreements “facilitate prompt and economical discovery by reducing delay before the discovering party obtains access to documents and by reducing the costs and burden of review by the producing party.”34

 

New Federal Rule of Civil Procedure 26(f) and the proposed change to New Hampshire Superior Court Rule 62 require litigants to discuss these e-discovery issues before the structuring conference.35  Counsel then must file a report with the court and propose a discovery plan that addresses these issues.36  The judge may adopt the parities’ discovery plan in whole or in part, including issuing an order that adopts their agreements on data preservation, form of production, and protection of privilege.37  For state courts that have not modified their processes to address e-discovery, litigants nonetheless should discuss and address these issues prior to the initial discovery conference, and incorporate any agreements or important issues into a stipulation or proposed court order. These types of discussions, which often occur at a time when counsel and the litigants are at their most amenable, and judicial involvement early in the litigation are invaluable tools to avoid, mitigate or at least identify disputes that may arise later.

 

3.   Know What Data Must Be Produced – Accessible vs. Inaccessible Data

The most difficult issues in e-discovery involve the type and amount of electronic data that is discoverable. These issues arise because of the exponentially increasing volumes of electronic data stored in multiple locations and on numerous devices, which may be time consuming and costly to recover, review and produce. These issues also arise because there is a direct tension between fundamental principles of litigation and data storage. While the right to broad discovery is a tenet of our judicial system, the efficient operation of computer systems requires that massive amounts of data be stored on media that are not amenable for searching and recovering specific data for litigation.

 

Early e-discovery cases often gave preference to the policy favoring broad discovery, requiring the responding party to produce discoverable electronic data from all available media at that party’s expense. The rationale was that allowing a party “whose business generates massive records to frustrate discovery by creating an inadequate filing system, and then claiming undue burden, would defeat the purposes of the discovery rules.”38  Those cases also relied on the established presumption “that the responding party must bear the expenses of complying with discovery requests,” subject only to a “court’s discretion under Rule 26(c) to grant orders protecting him from ‘undue burden or expense’ in doing so.”39

 

As litigants dealt with the production of electronic data more frequently, the judiciary started to recognize that e-discovery presents its own unique problems. For example, a party responding to a document request can “shift the majority of the costs” of production to its opponent simply by making the records available for inspection. But that option is not feasible for e-discovery. Because litigants are understandably “hesitant to open up their computer banks for inspection” and such a process “is impracticable because of the myriad of types of computers and the lack of expertise on the part of parties and their lawyers ..., the requested party most often has no reasonable choice other than to produce the documentation in a comprehensible form by use of its own computer technicians.”40  Moreover, applying traditional rules of litigation discovery to electronic data is problematic because “discoverable evidence is often only available from expensive to restore” media.41

 

a.   Zubulake’s Seven Factor Cost Shifting Test Set the Standard

Judge Scheindlin authored a series of landmark decisions in Zubulake establishing the basic rules for e-discovery. She recognized that, because electronic data “is no less subject to disclosure than paper records,” a litigant is entitled to protection only if it can show that such discovery imposes “undue burden or expense.”42  If so, the litigant is entitled to a protective order, including conditioning discovery on the requesting party’s payment of the costs for it. Thus, the solution for many e-discovery woes has been “to consider cost-shifting: forcing the requesting party, rather than the answering party, to bear the costs of discovery.”43

 

However, cost-shifting should not be considered “in every case involving the discovery of electronic data, which—in today’s world—includes virtually all cases.”44  There are many types of electronic data, and not all of them are time consuming or costly to access; therefore, it would be inappropriate to shift the cost of producing such data to the requesting party. Also, as “large companies increasingly move to entirely paper-free environments, the frequent use of cost-shifting will have the effect of crippling discovery” and may “ultimately deter the filing of potentially meritorious claims.”45

 

Thus, one of the most basic rules of e-discovery is that cost shifting should be considered “only when electronic discovery imposes an ‘undue burden or expense’ on the responding party.”46  With electronic data, that “turns primarily on whether it is kept in an accessible or inaccessible format (a distinction that corresponds closely to the expense of production).”47  The distinction between accessible and inaccessible data is a touchstone for e-discovery.

 

Whether data is accessible or inaccessible depends largely on the media where it resides. Data is accessible if it is “retained in a machine readable format,” such as active data on servers and hard drives, near-line or off-line data on storage devices, and other “readily usable” data that “does not need to be restored or otherwise manipulated to be usable.”48  Data is inaccessible if it is not readily usable, such as data on backup tapes, deleted or residual data, and legacy data. It is appropriate to consider cost shifting only if the data sought is not readily accessible, and it should not be considered if the data is accessible to the producing party.

 

The cost-shifting analysis for e-discovery arose from the proportionality test in Federal Rule of Civil Procedure 26(b)(2) and corresponding state rules. Under that test, a party can be protected from discovery if “the burden or expense of the proposed discovery outweighs its likely benefit, taking into account the needs of the case, the amount in controversy, the parties’ resources, the importance of the issues at state in the litigation, and the importance of the proposed discovery in resolving the issues.”49

 

Based on the proportionality test and the differences between electronic data and documents, Judge Scheindlin outlined the following seven factors to consider when determining if any of the costs of discovery of inaccessible data should be shifted to the requesting party.50

 

(1) Are the requests specifically tailored to discover novel and relevant information?  Cost shifting is disfavored if the requests are narrowly tailored, such as by subject matter, person and time, and are likely to recover information that was not already discovered. But, if the requesting party is seeking broad or a substantial amount of discovery from inaccessible data, shifting some of the costs of such discovery to that party would be justified.51

 

(2) Is the information available from more accessible sources?  If the information is uniquely available from inaccessible data, cost shifting may not be inappropriate, particularly if it was made unavailable by the responding party’s failure to preserve it. However, if the information can be recovered from readily accessible sources, it is appropriate to require the requesting party either to resort to those alternatives first or pay the cost of discovery.

 

(3) How does the cost of recovering the inaccessible data compare to the amount in controversy?  Significant cases justify substantial e-discovery burdens, whereas cases involving a relatively small amount cannot, unless the requesting party will bear that burden. A litigant “should not be required to pay for the restoration of inaccessible data if the cost of that restoration is significantly disproportionate to the value of the case.”

 

(4) How does the cost of recovering the inaccessible data compare to the resources of the parties?  If the responding party has sufficient resources to pay for the restoration of the data and such discovery would be cost prohibitive for the requesting party, then cost shifting may be unwarranted. However, cost shifting may be appropriate if the parties have similar resources, if they both have relatively substantial resources, or if the requesting party’s claim is of such an amount that it would have meaningful resources if it prevails.52

 

(5) What are the abilities of the parties to control costs and their motives to do so?  If information technology personnel employed by the responding party can restore and search the inaccessible data effectively and cost efficiently, cost shifting may be inappropriate. However, cost sharing may be justified if the work must be performed by an outside vendor, or if the responding party has the ability to narrow its requests but refuses to do so.

 

(6) How important are the issues at stake in the litigation?  If the issues have import beyond the particular litigation, there may be reason to require the producing party to bear the costs of recovering inaccessible data. Because most cases do not entail such issues, this factor “only rarely comes into play” but “has the potential to predominate” if it does.53

 

(7) Who will benefit from restoring the inaccessible data?  This factor is the “least important because it is fair to presume that the response to a discovery request generally benefits the requesting party. But, in the unusual case, where production will also provide a tangible or strategic benefit to the responding party, that fact may weigh against shifting costs.”54

 

This factor based test cannot be mechanically applied, and requires more analysis than just a sum of the factors. Because the ultimate issue is whether the discovery requests entail undue burden or expense, the central question is “how important is the sought-after evidence in comparison to the cost of production?”55  Consequently, the first two factors—which together comprise a “marginal utility” analysis—are the most important.56  The more likely it is that the inaccessible data contains relevant information, the fairer it is to require the responding party to recover the information at its own cost. The utility of the discovery is then weighed against the cost issues represented by the third, fourth and fifth factors to determine whether the likely benefits of the discovery outweigh its costs, or visa versa.

 

This test also is highly fact dependent. It therefore is often prudent or necessary for the parties to gather the facts needed to undertake the cost shifting analysis via a “test run” on a small sample of the inaccessible data at issue.57  A representative sample of the inaccessible data is selected; the responding party or an outside vendor restores it; the requesting party specifies search criteria; the responding party or vendor conducts electronic searches using those criteria; the responding party reviews the responsive data and produces non-privileged materials; and the responding party reports about the utility and costs of the endeavor.58

 

While sampling is itself costly, it has significant benefits. The marginal utility analysis will not be “an exercise in speculation,” because there will be “tangible evidence of what the [other inaccessible data] may have to offer,” and there “will also be tangible evidence of the time and cost required to restore” additional data.59  As a result, the cost-shifting analysis, which may be the most important pre-trial decision, can be grounded in fact rather than guesswork.

 

This analysis will not result in an all-or-nothing outcome in many situations, but rather a partial allocation depending on a balancing of the factors. The “precise allocation is a matter of judgment and fairness rather than a mathematical consequence.”60  Excessive cost shifting may chill the rights of litigants to pursue meritorious claims. On the other hand, under-shifting poses a very real danger that the requesting party can initiate significant additional discovery of inaccessible data, at great burden and expense to the responding party, because it is relatively inexpensive and tactically advantageous to do so. The danger of under-shifting is further exacerbated if the costs shifted include only the costs for restoration and searching, and not the costs for counsel to review materials yielded by the searches.61

 

b.   Fed. R. Civ. P. 26(b)(2) Codifies the Cost Shifting Analysis

Amended Federal Rule of Civil Procedure 26(b)(2) “codifies the best practices of parties and courts” by retaining the distinction between accessible and inaccessible data.62  The reality of e-discovery is that litigants have created a two-tier practice, first obtaining and examining data from accessible sources, then determining whether it is necessary or prudent to restore and search data on difficult or costly to access media. Distinguishing between accessible and inaccessible data therefore simply recognizes the reality of the practice.

 

Under the new Rule, a litigant first must produce all discoverable data from “reasonably accessible” sources.63  At the same time, in its responses to the requests, the litigant must “identify, by category or type, the sources containing potentially responsive information that it is neither searching nor producing” as a result of the data being “not reasonably accessible because of undue burden or cost.”64  This identification of inaccessible data must be detailed enough to enable the requesting party to evaluate the burdens and costs of providing the discovery and the likelihood that responsive data exists the identified sources.

 

The Rule does not specify what data or media are inaccessible. Rather, there is only a general guideline that data is accessible if it resides on a system providing “ready access” to it, whether it is “used in regular ongoing activities” or not.65  That standard encompasses the types of data identified in Zubulake as accessible, such as active data, near-line, off-line data, and other data accessible without the need for it to be restored. By contrast, data is inaccessible if there are “substantial burdens or costs” to access it.66  That language intentionally leaves much to interpretation, and is flexible enough to accommodate both new technologies and innovations that make previously inaccessible data accessible. The language also was intended to encompass the types of data identified in Zubulake as being currently inaccessible, such as data on backup tapes, certain deleted data, and legacy data.67

 

In many cases, litigants will be able to fully or nearly satisfy their discovery obligations from accessible data. As a result, a litigant must first review data produced from such sources before requesting that the responding party restore data from inaccessible sources. After reviewing the initial production, if a litigant believes that further data should be retrieved from inaccessible sources, the parties must “discuss the burdens and costs of accessing and retrieving the information, the needs that may establish good cause for requiring all or part of the requested discovery [from inaccessible sources], and conditions on obtaining and producing the information that may be appropriate.”68

 

If the parties cannot agree about this e-discovery, they then may raise the issue with the court by a motion to compel or for a protective order. The responding party has the burden upon such a motion to show “that the identified sources of information are not reasonably accessible because of undue burden or cost.”69  If the responding party cannot establish that the data at issue is inaccessible, it must produce it at its own cost. If it does make that showing, the burden shifts to the requesting party to establish good cause for the e-discovery.

 

Like courts that have faced these issues, new Rule 26(b)(2) contemplates the need for discovery just to assess whether data is accessible or inaccessible and, if inaccessible, whether there is good cause to require restoration of it. In fact, such discovery is frequently necessary because the parties often know little about the content of the data or the cost to retrieve it. “In such cases, the parties may need some focused discovery, which may include sampling of the sources to learn more about what burdens and costs are involved in accessing the information, what the information consists of, and how valuable it is for the litigation in light of information that can be obtained by exhausting other opportunities for discovery.”70

 

Once the parties gather sufficient evidence to make a determination about good cause, the evidence will be measured against a new seven factor test in the Advisory Committee Note. While the new test shares some elements with the Zubulake test, several are different and the new test as a whole focuses far more on the likely utility of the discovery. Under the Rule, the “appropriate considerations” for the good cause determination are as follows:

 

(1) whether the requests are specific (Zubulake #1);

(2) whether data is available from more accessible sources (Zubulake #2);

(3) whether data may have previously resided on accessible sources but is no longer available from those sources (part of Zubulake #2);

(4) the likelihood of finding relevant data that cannot be obtained from more accessible sources (part of the marginal utility test);

(5) the likely importance of the data (part of the marginal utility test);

(6) the importance of the issues at stake in the litigation (Zubulake #6); and

(7) the parties’ resources (Zubulake #4).71

 

Noticeably absent is a factor permitting a comparison of the costs of the e-discovery to the amount in controversy. That consideration should be assessed to determine if there is good cause to require burdensome discovery in a particular case. As a result, courts should and likely will continue to factor this consideration into the overall analysis.

 

The good cause inquiry is intended to work hand-in-hand with the court’s authority to set conditions for discovery and the litigants’ ability to stipulate to terms themselves. The conditions include limiting “the amount, type, or sources” of data to be accessed, and requiring “payment by the requesting party of part or all of the reasonable costs” of the e-discovery.72  In fact, a litigant’s willingness to share or bear the costs may be considered in the good cause determination. However, unlike the court decisions in this area, the new Rule provides that “the producing party’s burdens in reviewing the information for relevance and privilege may weigh against permitting the requested discovery.”73

 

4.   Protect Privilege and Work-Product in Electronic Data

E-discovery creates considerable problems for protecting privilege and work-product. Reviewing documents for this information is time consuming enough, but the “immense volume of electronic documents now being poured into the litigation process exacerbates this unavoidable problem.”74  The extensive use of email by businesses and their attorneys and the informality of such communications also make “privilege determinations more difficult and privilege review correspondingly more expensive and time consuming.”75  Finally, documents in native form include metadata that may contain privileged or work-product information without the metadata being apparent or even known to the person conducting the review.

 

Litigants consequently have designed agreements to deal with the inevitable problem of inadvertent disclosure. For example, in a “clawback agreement,” the parties agree that the production of privileged or work product material will not operate as a waiver, and the producing party has a right to recover the material when it discovers the inadvertent disclosure. Similarly, a “quick peek” agreement permits a litigant to make a large quantity of materials available for review by its opponent without waiver, usually on an attorneys-eye-only basis, and the litigant reviews only the materials designated by opposing counsel for production.

 

The new Federal Rules of Civil Procedure require litigants to discuss whether such an arrangement is warranted before the discovery conference and report to the court about it. If an agreement is reached, it may be incorporated into the discovery order. However, the court does not have the authority to order such an arrangement without consent from the parties.76

 

The new rules also codify a procedure governing inadvertent disclosure of privilege and work product. Under Rule 26(b)(5), a party that inadvertently discloses such material may notify its opponent in writing of the material disclosed and the basis for the privilege or work product claim. That notice “should be sufficiently detailed so as to enable the receiving party and the court to understand the basis for the claim and determine whether waiver has occurred.”77

 

After receiving notice, the other party “must promptly return, sequester, or destroy the specified information and any copies it has”; it “may not use or disclose the information until the claim resolved”; and it must “take reasonable steps to retrieve” any such materials disclosed prior to receiving the notice.78  If the receiving party wants to assert a challenge, it should “promptly present the information to the court under seal,” along with the written notice received from the producing party.”79

 

New Rule 26(b)(5) only establishes a procedure for inadvertent disclosures. It “does not address whether the privilege or protection that is asserted after production was waived by the production.”80  If litigants want to avoid that problem, they must enter into a specific agreement stating that inadvertent disclosure will not result in waiver, such as a clawback agreement, and have the agreement adopted in the discovery order. Similarly, if litigants are in state courts that do not have procedures similar to Rule 26(b)(5), they can stipulate or propose a court order concerning non-waiver and procedures to govern inadvertent disclosures.

 

C.   Preservation, Spoliation and Sanctions Are Critical E-Discovery Issues

“Documents create a paper reality that we call proof. The absence of such documentary proof may stymie the search for truth.”81  If documents are destroyed when they should have been preserved, one party will be unfairly prejudiced and the other unfairly rewarded. While sanctioning a litigant can be a remedy for such spoliation, e-discovery severely complicates this calculus. “As documents are increasingly maintained electronically, it has become easier to delete or tamper with evidence (both intentionally and unintentionally) and more difficult for litigants to craft policies that ensure all relevant documents are preserved.”82  Thus, spoliation of electronic data and appropriate sanctions for it are critical e-discovery issues.

 

1.   Electronic Data Must Be Preserved for Litigation

Spoliation is the destruction, alteration or failure to preserve evidence for litigation. The rules of spoliation are just as applicable to electronic data as they are to other materials. Moreover, given society’s ever growing reliance on data, the need to preserve it for litigation may be even more critical than the need to preserve other types of evidence.

 

Determining if a person has a duty to preserve electronic data is a two step inquiry. First, has the duty to preserve been triggered?  The duty arises at the time litigation is “reasonably anticipated.”83  Thus, the duty to preserve can arise not just at the start of or during a case, but also beforehand if litigation is reasonably foreseeable.

 

Second, what electronic data does a person have a duty to preserve?  “Must a corporation, upon recognizing the threat of litigation, preserve every shred of paper, every e-mail or electronic document, and every backup tape?  The answer is clearly, ‘no.’  Such a rule would cripple large corporations.”84  Rather, the duty extends only data that a person “knows, or reasonably should know, is relevant in the action, is reasonably calculated to lead to the discovery of admissible evidence, is reasonably likely to be requested during discovery and/or is the subject of a pending discovery request.”85

 

Electronic data presents unique and significant preservation challenges. Knowing what electronic data exists, deciding what data must be preserved in anticipation of a litigation, and then locating and securing that data are extremely difficult tasks in a world where a wide variety of data exists in massive quantities, is dispersed to many locations and on numerous devices, is prone to unintentional and automatic deletion or modification, and may be invisible to the average user or inaccessible for search and retrieval. For these reasons, determining what data to preserve is a much greater challenge for e-discovery than it is for traditional discovery.

 

For example, backup tapes, deleted and residual data, and other inaccessible data initially created serious problems, because a person’s duty to preserve these types of data was a grey area. However, litigants are now “on notice” that they are required to preserve such media if it may contain discoverable data.86  In fact, under the new Federal Rules of Civil Procedure, counsel must discuss these issues in preparation for the discovery conference, and the litigants must identify inaccessible media that may contain discoverable data. Litigants certainly have a duty to preserve the data discussed and disclosed at these early stages of the litigation, absent an agreement between the parties or an order from the court otherwise.87  Moreover, it is becoming increasingly common, and a sound practice, for a litigant to send a preservation demand letter to an opponent either before or at the initiation of a lawsuit, alerting the opponent to the electronic data that it believes the opponent should preserve. Any unjustified failure to preserve such data would certain raise questions about spoliation.

 

While e-discovery certainly imposes new and challenging preservation demands on litigants, there is also a clear path to success. The following are the steps that organizations and counsel should follow to satisfy these obligations.

 

First, issue a “litigation hold.”  As soon as litigation is reasonably foreseeable, a notice should be disseminated stating that potentially discoverable materials must be preserved.88  The notice should describe the subject matter of the anticipated claims sufficiently to identify likely topics of discovery, and describe the records to be segregated or otherwise secured. Electronic data and media on which it is stored should be expressly identified in the litigation hold. The notice should not be sent to all employees, but rather only key players in the potential litigation, since they are most likely to have discoverable materials; and it should be sent to any information technology personnel necessary to help assess and preserve data. The notice also should identify a contact person for questions, who will coordinate the preservation efforts.

 

The duty to preserve electronic data does “not end with the implementation of a ‘litigation hold’—to the contrary, that’s only the beginning.”89  Counsel must then oversee compliance with the litigation hold to ensure that all potentially discoverable data is identified, retained on a continuing basis, and produced if responsive.

 

Thus, the second step in this process is for counsel to become sufficiently familiar with the organization’s technology systems to be able to assess what data may exist and need to be preserved. Counsel “must become fully familiar with [the] client’s document retention policies, as well as the client’s data retention architecture. This will invariably involve speaking with information technology personnel, who can explain system-wide backup procedures” and the organization’s recycling policy.90  At this time, counsel also should implement any necessary hold on system-wide destruction of data or recycling of media.

 

Third, interview the key players. This is the most critical step. During the interviews, review the litigation hold with each person, and discuss the data that the person has and the media where it resides. Gather the data if possible, or implement other measures to secure data against destruction or alteration; and arrange for each person to continue to save and produce additional data that they may create or obtain thereafter.91  If necessary, work with in-house information technology personnel or a third-party vendor to secure the potentially discoverable electronic data associated with each key player, including backup tapes related to them.92

 

This step is vital because, unless “counsel interviews each employee, it is impossible to determine whether all potential sources of information have been inspected.”93  Gone are the days when counsel can just discuss the likely scope of discovery with the client and then rely on the client to produce responsive materials. In the digital age, counsel must actively coordinate and participate in e-discovery, ensuring that all potentially discoverable data is identified, preserved, restored (if appropriate), searched and produced.

 

In short, it is not sufficient to notify all employees of a litigation hold and expect that the party will then retain and produce all relevant information. Counsel must take affirmative steps to monitor compliance so that all sources of discoverable information are identified and searched. This is not to say that counsel will necessarily succeed in locating all such sources, or that the later discovery of new sources is evidence of a lack of effort. But counsel and client must take some reasonable measures to see that sources of relevant information are located.94

 

Finally, counsel should periodically reassess the preservation obligations and reissue the litigation hold. It is common that the type of issues and number of players involved in a case expand. Preservation measures must expand accordingly. A litigant’s preservation obligations also may change dramatically when suit is actually filed or discovery requests served. And, if for no other reason, counsel should reissue the hold because (unlike a computer) human memory fades, and doing so will reinforce the important message of preservation and create helpful evidence in the event any data is destroyed intentionally or accidentally.

 

2.   Sanctions for Spoliation Are Common and Severe

Sanctions for spoliation of electronic data can be severe, including the imposition of attorney’s fees, fines, and adverse evidentiary inferences. Nonetheless, a new decision is issued almost daily in which a court has sanctioned a litigant for spoliation of electronic data. This problem is common because most litigants still do not understand the scope of their duty to preserve data; there is an overwhelming amount of potentially discoverable data that is susceptibility to unintentional and automatic destruction; and data plays such an important role in cases that the destruction of if justifies or demands sanctions.

 

Spoliation sanctions have a dual role. One purpose is restoration. Where “a party has been prejudiced by the spoliation of electronic documents, courts have imposed sanctions aimed at restoring the prejudiced party to the position she would have been in had the documents not been destroyed.”95  To serve this purpose, courts have often remedied the prejudice by imposing an evidentiary sanction or adverse inference, and shifting the cost of discovery necessitated by the spoliation. The other purpose for sanctions is punitive, namely, to punish the spoliator and deter future similar misconduct. When faced with a knowing or willful destruction of data, courts are less concerned with prejudice and more inclined to impose a punitive sanction, such as a monetary fine or attorney’s fees award.

 

An adverse evidentiary inference is the most common sanction for spoliation of electronic data. It is also one of the most severe. An evidentiary inference “often ends the litigation” because it is just “too difficult a hurdle for the spoliator to overcome.”96  As a result, some courts require a litigant to show that its opponent destroyed the data willfully.97  However, most courts recognize that “a finding of bad faith is not necessary to impose discovery sanctions,” and issue sanctions for a “lesser degree of culpability.”98

 

Instead of trying to assess the state-of-mind of the litigant, courts and the new Federal Rules of Civil Procedure focus on whether the litigant failed to satisfy its obligations to preserve electronic data. Once the duty to preserve has attached, any spoliation will likely justify some type of sanction, depending on the nature and impact of the destruction. Sanctions are warranted because a litigant who looses or destroys electronic evidence is culpable in the sense that it should bear the consequences of its conduct.99

 

To mitigate one danger of spoliation inherent in e-discovery, new Federal Rule of Civil Procedure 37 creates a safe harbor for certain conduct. “Absent exceptional circumstances,” federal courts may not impose sanctions “for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system.”100

 

This protection is very limited. It only applies to data lost due to the routine operations of a technology system: i.e., “the ways in which such systems are generally designed, programmed, and implemented to meet the party’s technical and business needs,” such as destruction or alteration of data “without the operator’s specific direction or awareness.”101  Thus, the Rule only protects a litigant who losses data due to automatic operations, such as the recycling of backup tapes or overwriting of deleted data. It does not protect against the loss of data due to manual operations, such as when a person deletes accessible data.

 

The loss of the data also must be in good faith. However, once a party anticipates litigation, good faith requires it “to modify or suspend certain features of the routine operations to prevent the loss” of information subject to the preservation obligation.102  A litigant cannot exploit the routine operations of a system to thwart or avoid its obligations by allowing the system to destroy data that should be preserved. When a litigant has a duty to preserve data, intervening in the routine operations of an information system is one aspect of the litigant’s duty to implement an effective litigation hold.

 

Even if a litigant can show that data was lost due to routine, good-faith operation of a technology system, its opponent still has a remedy in “exceptional” situations. Thus, sanctions may still be justified “to protect an entirely innocent party requesting discovery sanctions against serious prejudice arising from the loss of potentially important information.”103

 

Finally, the only protection a litigant receives under new Rule 37 is from “sanctions” awardable under that rule. “It does not prevent the court from making the kinds of adjustments frequently used in managing discovery,” such as requiring the spoliator to pay for additional depositions and recovery of the data from inaccessible sources.104

 

      D.   Conclusion

While e-discovery can be daunting, its increasing importance in litigation is as inevitable as technological innovation itself. Litigators who proactively tackle the task of learning e-discovery will remain relevant and have the ability to benefit from the significant advantages that electronic media presents for litigation. While the development of e-discovery law has been a somewhat turbulent process to date, now that many of the “key issues have been addressed and national standards are developing, parties and their counsel are on notice” of their responsibilities with respect to discovery in the digital age.105

 

This article is the first in a series of two articles addressing the intersection of litigation and technology. This article addressed the responsibilities of parties for e-discovery leading up to and during the litigation process. The second article, which will appear in the next edition of the New Hampshire Bar Journal, will address the prophylactic measures that businesses should implement to prepare for e-discovery in the absence of anticipated litigation, including the creation and use of sound electronic data management policies.

 

Endnotes

1.   Cameron G. Shilling is a Shareholder at McLane, Graf, Raulerson & Middleton in Manchester, New Hampshire, where he leads the firm’s Employment Litigation Group. His expertise is in complex business litigation. Cameron is adept at handling trade secrets and non-competition lawsuits, commercial and employment contract cases, and employment discrimination and harassment suits. He also routinely advises employers on risk management issues, and creates and implements electronic data management policies. He has an active practice in New Hampshire and Massachusetts, and also litigates cases throughout New England and around the country.

2.   Scheindlin, Shira A. and Rabkin, Jeffery, Electronic Discovery in Federal Civil Litigation: Is Rule 34 up to the Task?, 41 B.C. L. Rev. 327, 366-67 (March 2006) (“Scheindlin & Rabkin”) (“Computer technology has produced a society in which information is constantly demanded, created, transmitted and digested in quantities that would have been unthinkable twenty-five years ago. * * * The use of computers in everyday life and the concomitant increase in computer data storage capacity has exponentially inflated the universe of discoverable information.”)

3.   Zubulake v. UBS Warburg LLC, 217 F.R.D. 309, (S.D.N.Y. 2003) (Zubulake I). The other Zubulake decisions cited in this article are Zubulake v. UBS Warburg LLC, 216 F.R.D. 280 (S.D.N.Y. 2003) (Zubulake II); Zubulake v. UBS Warburg LLC, 220 F.R.D. 212 (S.D.N.Y. 2003) (Zubulake III); and Zubulake v. UBS Warburg LLC, 229 F.R.D. 422 (S.D.N.Y. 2004) (Zubulake IV).

4.   Scheindlin & Rabkin, p. 338-39 (“With the rise of its use in the office, and because of the common tendency to say things in e-mail messages that otherwise would not be reduced to written form, e-mail has proved to be the source of the ‘smoking gun’ in high profile cases and, as might be expected, the focus of much discovery for litigation.”)

5.   Fed. R. Civ. P. 34, Advisory Committee Note (1970).

6.   Zubulake I, 217 F.R.D. at 311.

7.   See www.thesedonaconference.org/publications_html.

8.   In addition to the Zubulake decisions, see Rowe Entertainment, Inc. v. The William Morris Agency, Inc., 205 F.R.D. 421 (S.D.N.Y. 2002); and McPeek v. Ashcroft, 202 F.R.D. 31 (D.D.C. 2001)

9.   Report of the Judicial Conference Committee on Rules of Practice and Procedure (September 2005) (“Judicial Conference Report”), p. C-109.

10. Rowe, 205 F.R.D. at 429.

11. Judicial Conference Report, p. 22 (“Commonly cited current examples of such volume include the capacity of large organizations’ computer networks to store information in terabytes, each of which represents the equivalent of 500 million typewritten pages of plain text, and to receive 250 to 300 million e-mail messages monthly.”)

12. Sedona, Introduction, p. 6 (“For instance, email has its own metadata elements that include, among about 1,200 or more properties, such information as the dates that mail was sent, received, replied to or forwarded, blind carbon copy (‘bcc’) information, and sender address book information.“)

13. Scheindlin & Rabkin, p. 349 (Computers “enable individuals and small businesses to store immense quantities of data, exposing them to the risks of litigation cost substantially out of proportion to their ability to bear those cost.”); Rowe, 205 F.R.D. at 429 (making requesting party pay “places a price on justice that will not always be acceptable: it would result in abandonment of meritorious claims by litigants too poor to pay for necessary discovery.”)

14. Zubulake I, 217 F.R.D. at 313, n. 19. See Sedona, Introduction, p. 4 (“A shredded paper document is essentially irretrievable. Likewise, a paper document that has been discarded and taken off the premises is generally considered to be beyond recovery. Disposal of electronic documents is another matter altogether.”)

15. Sedona, Introduction, p. 5. See Judicial Conference Report, p. 23.

16. Scheindlin & Rabkin, p. 337 (Computers “generate far more information than most users realize. For example, most word processor programs automatically store prior drafts of written documents, as well as the time and dates of past edits and the name of the person who made those edits.”)

17. Judicial Conference Report, p. 23.

18. Sedona, Introduction, p. 6.

19.  McPeek, 202 F.R.D. at 32-33 (“In a traditional ‘paper’ case, the producing party searches where she thinks appropriate for the documents requested …. She is aided by the fact that files are traditionally organized by subject or chronology …. Backup tapes are by their nature indiscriminate. They capture all information at a given time and from a given server but do not catalogue it by subject matter.”)

20. Id. at 33.

21. Id. at 34.

22. Bills v. Kennecott Corp., 108 F.R.D. 459, 463-64 (D. Utah 1985).

23   Linnen v. A.H. Robins Co., Inc., 10 Mass. L. Rptr. 189, 1999 WL 462015, *6 (Mass. Super. June 16, 1999).

24. Judicial Conference Report, Introduction to Fed. R. Civ. P. 33 and 34, p. C-64.

25. Id., Fed. R. Civ. P. 34 (a), Advisory Committee Note, p. C-74-75

26. Id., Fed. R. Civ. P. 34(b), p. C-71-72.

27. Id., Fed. R. Civ. P. 34(b)(ii).

28. Id., Introduction to Fed. R. Civ. P. 33 and 34, p. C-66 (“‘native format’ production … can have disadvantages ranging from an inability to redact, leading to privilege problems; an inability to bates-stamp the ‘documents’ for purpose of litigation management and control, which is not an insignificant consideration, particularly in complex multi-party cases; and the receiving party’s ability to create ‘documents’ from the produced native format data and present them back to the producing party as deposition or proposed trial exhibits that, while based on the native format data produced, are totally unfamiliar to the producing party.”)

29. Id., Fed. R. Civ. P. 34(b), Advisory Committee Note, p. C-77 (“the option to produce in a reasonably usable form does not mean that a responding party is free to convert electronically stored information from the form in which it is ordinarily maintained to a different form that makes it more difficult or burdensome for the requesting party to use the information efficiently in the litigation. If the responding party ordinarily maintains the information it is producing in a way that makes it searchable by electronic means, the information should not be produced in a form that removes or significantly degrades this feature.”)

30. Id.

31. Sedona, Principle 3, cmt. 3(a). See Judicial Conference Report, p. 26.

32. Judicial Conference Report, Fed. R. Civ. P. 26(f), Advisory Committee Note, p. C-33.

33. Id., p. C-34.

34. Id., p. C-36.

35. Id., p. C-31-32; New Hampshire Advisory Committee on Rules (Nov. 8, 2005) (“N.H. Report”), Appx. p. 3 (“No later than twenty days prior to the Structuring Conference counsel for all parties, or parties if unrepresented, shall either meet and confer personally or by telephone to discuss the claims, defenses and counterclaims and to attempt to reach agreement on … the scope of discovery, including particularly with respect to information stored electronically or in any other medium, the extent to which such information is reasonably accessible, the likely costs of obtaining access to such information and who shall bear said costs, the form in which such information is to be produced, the need for and the extent of any holds or other mechanisms that have been or should be put in place to prevent the destruction of such information, and the manner in which the parties propose to guard against the waiver of privilege claims with respect to such information.”)

36. Id., Form 35, p. C-39-40; N.H. Report, Appx. p. 3-4 (“Ten days prior to the Structuring Conference the parties shall either file a comprehensive written stipulation, signed by all counsel, or by the parties if unrepresented, addressing all of the foregoing matters; or, if the parties have been unable to reach agreement on one or more issues, each party shall submit a proposed order on those matters ….”)

37. Id., Fed. R. Civ. P. 16(b)(5) and (6), p. C-26-27; N.H. Report, Appx. p. 4.

38. Dunn v. Midwestern Indemnity, 88 F.R.D. 191, 198 (S.D. Ohio 1980).

39. Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 358 (1987).

40. Bills, 108 F.R.D. at 462.

41. Zubulake I, 217 F.R.D. at 316.

42. Id. at 316 and 317, citing, Federal Rule of Civil Procedure 26(c).

43. Id. at 316.

44. Id. at 317.

45. Id. at 317-18.

46. Id. at 318 (emphasis in original) (“Many courts have automatically assumed that an undue burden or expense may arise simply because electronic evidence is involved. This makes no sense. Electronic evidence is frequently cheaper and easier to produce than paper evidence because it can be searched automatically, key words can be run for privilege checks, and the production can be made in electronic form obviating the need for mass photocopying.”)

47. Id. (emphasis in original).

48. Id. at 318-20.

49. Fed. R. Civ. P. 26(b)(2)(iii).

50. Zubulake I, 217 F.R.D. at 320-22.

51. Rowe, 205 F.R.D. at 429-30 (“The less specific the requesting party’s discovery demands, the more appropriate it is to shift the costs of production to that party. * * *  Where a party multiplies litigation costs by seeking expansive rather than targeted discovery, that party should bear the expense.”

52. Zubulake II, 216 F.R.D. at 288 (while the defendant in this case had “exponentially greater resources available to it” compared to the plaintiff, the plaintiff was seeking to recover $19 million and, therefore, “she may have the financial wherewithal to cover at least some of the costs of restoration”; moreover, in such cases, “it is not unheard of for plaintiff’s firms to front huge expenses when multi-million dollar recoveries are in sight.”)

53. Zubulake I, 217 F.R.D. at 323.

54. Id. (emphasis in original).

55. Id. at 322-23.

56. Id. at 323. See McPeek, 202 F.R.D. at 34.

57. Id., 202 F.R.D. at 34.

58. See Zubulake I, 217 F.R.D. at 324; Rowe, 205 F.R.D. at 432-33; McPeek, 202 F.R.D. at 34-35.

59. Zubulake I, 217 F.R.D. at 324.

60. Zubulake II, 216 F.R.D. at 289 (ordering the plaintiff to pay 25% of the cost of restoration and searching).

61.  Id. at 290 and 291 (“the responding party should always bear the cost of reviewing and producing electronic data once it has been converted to an accessible form” for two reasons: first, “the producing party has the exclusive ability to control the cost of reviewing the documents,” including the ability to substantially reduce such costs by entering into an agreement with the requesting party to preserve its rights with respect to privileged documents; and second, because “cost-shifting is only appropriate for inaccessible—but otherwise discoverable—data, it necessarily follows that once the data has been restored to an accessible format and responsive documents located, cost shifting is no longer appropriate. Had it always been accessible, there is no question that [the responding party] would have had to produce the data at its own cost”) (emphasis in original). See Rowe, 205 F.R.D. at 433.

62. Judicial Conference Report, p. C-31.

63. Id., Fed. R. Civ. P. 26(b)(2)(B), Advisory Committee Note, p. C-45-46.

64. Id., Fed. R. Civ. P. 26(b)(2)(B), p. C-45-46; Id., Advisory Committee Note, p. C-47-48.

65. Id. Fed. R. Civ. P. 26(b)(2)(B), Advisory Committee Note, p. C-47.

66. Id.

67. Id., Introduction to Fed. R. Civ. P. 26(b)(2), p. C-42 (“difficulties in accessing the information may arise from a number of different reasons primarily related to the technology of information storage, reasons that are likely to change over time. Examples from current technology include back-up tapes intended for disaster recovery purposes that are often not indexed, organized or susceptible to electronic searching; legacy data that remains from obsolete systems and is unintelligible on the successor systems; data that was ‘deleted’ but remains in fragmented form, requiring a modern version of forensics to restore and retrieve; and databases that were designed to create certain information in certain ways and that cannot readily create different kinds or forms of information.”)

68. Id., Fed. R. Civ. P. 26(b)(2)(B), Advisory Committee Note, p. C-48.

69. Id.

70. Id., p. C-49-50.

71. Id., p. C-49.

72. Id., p. C-50.

73. Id.

74. Sedona, Principle 3, cmt. (b). See Judicial Conference Report, Introduction to Fed. R. Civ. P. 26(b)(5), p. C-54.

75. Judicial Conference Report, Fed. R. Civ. P. 26(f), Advisory Committee Note, p. C-35.

76.  Id., Fed. R. Civ. P. 26(f)(4), p. C-32; Id., Fed. R. Civ. P. 16(b)(6), Advisory Committee Note, p. C-27-28.

77. Id., Fed. R. Civ. P. 26(b)(5), Advisory Committee Note, p. C-59.

78. Id., Fed. R. Civ. P. 26(b)(5), p. C-57-58.

79. Id., p. C-57.

80. Id., Advisory Committee Note, p. C-58.

81. Zubulake III, 220 F.R.D. at 214.

82. Id.

83. Zubulake III, 220 F.R.D. at 217. See Sedona, Principle 1.

84. Id. at 217.

85.  Id.

86. Zubulake III, 220 F.R.D. at 220 and n. 47.

87. Judicial Conference Report, Fed. R. Civ. P. 26(b)(2), Advisory Committee Note, p. C-48 (“A party’s identification of sources of electronically stored information as not readily accessible does not relieve the party of its common-law or statutory duties to preserve evidence.”)

88.  Zubulake IV, 229 F.R.D. at 439 (“counsel has a duty to effectively communicate to her client its discovery obligations so that all relevant information is discovered, retained and produced.”); Zubulake III, 220 F.R.D. at 218 (“Once a party reasonably anticipates litigation, it must suspend its routine retention/destruction policy and put in place a ‘litigation hold’ to ensure the preservation of relevant documents.”)

89. Id. at 432

90. Id. 91 Zubulake III, 202 F.R.D. at 218 (“In recognition of the fact that there are many ways to manage electronic data, litigants are free to choose how this task is accomplished. For example, a litigant could choose to retain all then-existing backup tapes for the relevant personnel … and to catalogue any later created documents in a separate electronic file. That, along with a mirror-image of the computer system taken at the time the duty to preserve attaches … creates a complete set of relevant documents.”)

92. Id. (“If a company can identify where particular employee documents are stored on backup tapes, then the tapes storing the documents of ‘key players’” should be preserved if otherwise unavailable.)

93.  Zubulake IV, 229 F.R.D. at 432 (“To the extent that it may not be feasible for counsel to speak with every key player, given the size of a company or the scope of the lawsuit, counsel must be more creative. It may be possible to run a system-wide keyword search: counsel could then preserve a copy of each ‘hit.’”)

94. Id. (emphasis in original).

95. Scheindlin, Shira A. and Wangkeo, Kanchana, Electronic Discovery Sanctions in the Twenty-First Century, 11 Mich. Telecomm. Tech. L. Rev. 71, 81 (2004) (“Scheindlin & Wangkeo”).

96. Zubulake III, 220 F.R.D. at 219-20.

97. See Murray v. Developmental Servs. of Sullivan County, Inc., 149 N.H. 264 (2003).

98. Scheindlin & Wangkeo, p. 80-81 and n. 46.

99. Zubulake III, 220 F.R.D. at 220; Sedona, Principle 14, cmt. (b).

100.      Judicial Conference Report, Fed. R. Civ. P. 37, p. C-86.

101.      Id., Fed. R. Civ. P. 37, Advisory Committee Note, p. C-87.

102.      Id.

103.      Id., p. C-88.

104.      Id.

105.      Zubulake IV, 229 F.R.D. at 440-41.

 

Cameron ShillingAuthor

Attorney Cameron G. Shilling is a Shareholder at McLane, Graf, Raulerson & Middleton in Manchester, New Hampshire, where he leads the firm’s Employment Litigation Group.

 

 

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